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Understanding What Counts as Business Income
Understanding What Counts as Business Income

Working out what to include as income for your self-employed tax return

Updated over a week ago

Self-Employed Business Income

The following count as towards business income and should be included in your self-employed tax return:
The tax man will want a cut of whatever you earn during the tax year which runs from 6 April to 5 April.

You can reduce your tax bill by claiming for any business expenses that HMRC allows.

We'll try to identify which transactions are income, but if any deposits to your connected account are actually from your own funds, you should change the category to "Paying In" so that we don't count the amount towards your taxable income.

Other Income
Any other income that you want to record separately from your "core" business income.

For example, income from letting part of your business accommodation (if it's not needed in the short term) or payments for the right to cross your land.

Not Self-Employed Business Income

Paying In (aka 'capital introduced')
If you transfer your own money into your business account, for example to cover expenses, then we call that "Paying In".

In bookkeeping and accounting, if you're a sole trader and you transfer your own money into your business account, the term for this is usually "Capital Introduced".

Paying In is excluded from your income, expenses and profit.

PAYE Income
If you are both employed and self-employed, you might earn some employment income which will be taxed through the PAYE system.

You might want to record this income through Coconut so you have all your income coming through the same place. You can record this as PAYE Income.

For guidance on how to set your tax set-aside rate when you have PAYE income, check out this article.

Interest Income
Any interest earned on your business deposits actually counts as personal interest income if you're a sole trader.

So it doesn't count towards your self-employment income when you do your tax return.

Instead it gets included in your personal interest income which you would declare through your main tax return, along with any other interest income you've earned.

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